Thomson v. Newey & Eyre Ltd

Factual and Procedural Background

The Plaintiff, who had traded either in his own name or under a trading name, was sued in England for a debt, resulting in a decree for payment. Subsequently, in September 1996, the Defendant petitioned for the Plaintiff's sequestration in the Sheriff Court at Hamilton, which led to a warrant and a hearing. The Plaintiff was served with the proceedings and tendered part payment. It was agreed between the parties that the Defendant was to have ceased the sequestration proceedings, but they failed to have them dismissed. The Defendant instructed a first third party to dismiss the proceedings, but the first third party failed to do so. The Plaintiff only became aware on 1 October 1997 that an interim trustee had been appointed following the granting of the Defendant’s petition in January 1997. Despite contacting solicitors shortly thereafter, a permanent trustee was appointed in December 1997. The sequestration was ultimately recalled in March 1999 by order of the Lord Ordinary on a petition.

The first third party paid the expenses of the Plaintiff in the recall petition and those of the interim and permanent trustees, suggesting potential liability and indemnity obligations between the first third party and the Defendant. The Plaintiff claimed damages for breach of contract, including economic loss due to the improper sequestration, and damages for personal injuries (stress, anxiety, and depression) resulting from the sequestration. The action was not signetted until November 2001. The second third party was not involved in the debate.

The Plaintiff’s delay in raising an action for damages prior to the expiry of the three-year limitation period (triennium) was explained by difficulties in funding, legal advice to wait until after the sequestration recall, and complications in obtaining legal files from solicitors. After further investigations and counsel advice, proceedings were authorized and raised in late 2001.

Several issues required to be resolved by proof before answer concerning the economic loss claim. The Defendants contended that the personal injury claim was barred by the Prescription and Limitation (Scotland) Act 1973, as amended, unless saved by a discretionary power under section 19A.

Legal Issues Presented

1. Whether the personal injury claim for damages caused by stress and anxiety resulting from the sequestration was barred by the three-year limitation period under section 17 of the Prescription and Limitation (Scotland) Act 1973.
2. Whether the court should exercise its discretion under section 19A of the same Act to allow the time-barred personal injury claim to proceed.
3. Whether the Defendants’ pleadings were sufficiently specified concerning the instructions given to the third parties regarding the sequestration proceedings.

Arguments of the Parties

Plaintiff's Arguments

• The delay in raising the personal injury claim was not the Plaintiff’s fault due to difficulties obtaining legal aid and funding, and advice to wait until after the sequestration was recalled.
• The Plaintiff sought to proceed by a single action rather than separate actions for economic loss and personal injury, to avoid significant prejudice.
• The Defendants or their agents bore some responsibility for the Plaintiff’s difficulties.
• The entire claim arose from one litigation that went wrong, justifying a single proceeding.

Defendants' Arguments (Adopted by First Third Party)

• The Plaintiff would not be without remedy if the personal injury claim was barred, as the economic loss claim remained.
• The Plaintiff’s involvement of multiple solicitors was by his own choice and should not favor him in a section 19A discretion argument.
• The breach of contract and personal injury claims were distinct, and the Plaintiff showed no particular expedition in bringing the personal injury claim.
• The Defendants would suffer considerable expense and inconvenience investigating a time-barred personal injury claim.
• Further delay occurred after the Plaintiff was aware that time-bar was an issue.
• The economic loss claim and personal injury claim involve different investigations; allowing the personal injury claim to proceed would be prejudicial.

Table of Precedents Cited

Court's Reasoning and Analysis

The court acknowledged that the personal injury claim was subject to a three-year limitation period under section 17 of the Prescription and Limitation (Scotland) Act 1973. The Plaintiff sought to invoke the court’s discretion under section 19A to allow the time-barred personal injury claim to proceed, relying on special circumstances including lack of fault for delay, complexity of funding, and the desire to avoid multiple actions. The court considered binding authorities and illustrative cases emphasizing that the discretion is unfettered but must be exercised on the facts of each case with a focus on what is just and equitable.

The court noted that unlike typical reparation actions for physical injuries with clear notice to the Defendant, this claim for stress-related injury was not substantial prior to the expiry of the limitation period and the Plaintiff did not obtain a medical report until after the triennium had expired. The Plaintiff had ample time and advice before the expiry of the limitation period but did not involve the Defendants in allegations of stress during that time. The Plaintiff also received advice to delay raising proceedings for over a year after the limitation period expired, which the court found weighed against allowing the claim to proceed.

Balancing the interests, the court found it would not be just and equitable to allow the personal injury claim to proceed. The Plaintiff would receive a windfall benefit by tacking a time-barred personal injury claim onto the economic loss claim. The economic loss claim would proceed, but the personal injury averments would be excluded.

Regarding the specification of the Defendants’ pleadings about instructions to third parties, the court found the averments sufficient. The Defendants had given clear notice of their case, and the conduct of the first third party after failing to withdraw the sequestration was averred. The court rejected the Plaintiff’s and first third party’s argument for further specification.

The court therefore allowed the action to proceed on the economic loss claim by way of proof before answer, excluding all averments related to personal injuries, and sustained certain pleas-in-law by the Defendants and third parties.

Holding and Implications

The court’s final decision was to allow the action to proceed against the Defendants with the deletion of all averments relating to personal injuries and to repel the Plaintiff’s fourth plea-in-law. The economic loss claim remained to be resolved by proof before answer.

The implication is that the Plaintiff’s personal injury claim for stress and related conditions is time-barred and will not proceed, while the breach of contract claim for economic loss remains live. No new precedent was established; the decision followed established principles on limitation and the exercise of discretion under section 19A of the Prescription and Limitation (Scotland) Act 1973.